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On March 2nd, Bank of Japan Deputy Governor Ryozo Himino gave no clear indication of a near-term interest rate hike, reinforcing financial markets expectations that the central bank will remain on hold in March. Following the outbreak of conflict in the Middle East last weekend, the market widely believed the Bank of Japan would maintain a wait-and-see approach. Himino stated, "I want to closely monitor the situation in the Middle East," a stark contrast to his comments in January, when he indicated the committee would discuss interest rate hikes at its upcoming meeting. Himino, who will hold a press conference this afternoon, said his prepared remarks were made before the weekend and therefore did not include his views on the Middle East situation. Himino stated that recent data "means the impact of a near-term rate hike remains limited, and financial conditions remain loose," suggesting there is still room for borrowing costs to rise. He also stated that underlying inflation is steadily rising and cited the Bank of Japans long-standing stance that it will continue to raise interest rates if its economic outlook is realized.The China Earthquake Networks Center officially reported that a 5.9-magnitude earthquake occurred at 11:55 a.m. on March 2 in the volcanic archipelago of Japan (23.10 degrees north latitude, 144.15 degrees east longitude), with a focal depth of 10 kilometers.According to ABC News, the U.S. House of Representatives is expected to vote on a war powers resolution on Thursday that would require the president to obtain congressional approval before taking any further military action.According to Iranian media reports on the 2nd, the Iranian Islamic Revolutionary Guard Corps said that a US MQ-9 Reaper drone was intercepted and shot down by a defense system in Isfahan, Iran.Daiwa: Lowered its target price for Xiaomi Group (01810.HK) from HK$55 to HK$45.

GBP/USD Price Analysis: Targets a Breakout above 1.2100 from the Descending Triangle

Daniel Rogers

Dec 30, 2022 12:01

 GBP:USD.png

 

In the Asian session, the GBP/USD pair is doing poorly due to investors' reluctance to acquire substantial positions due to the holiday market sentiment. The Cable is fluctuating within a 10-pip band below 1.2060 and will likely continue to do so in the foreseeable future.

 

Following a decline to approximately 103.50, the US Dollar Index (DXY) has attempted a recovery. As risk appetite improved on Thursday, the USD Index witnessed a big fall. The yield on 10-year US Treasury bonds slipped below 3.83 percent during early trading.

 

The Cable is building speed in anticipation of an hourly breakout from the chart pattern of a Descending Triangle. The major currency is hovering near the downward-sloping trendline drawn from the high of December 19 at 1.2242, while the horizontal support of the previously described chart pattern is placed at the low of December 22 at 1.1992.

 

The pair is trading above the 20-period Exponential Moving Average (EMA) above 1.2050, indicating a strong near-term rise.

 

A consolidation is coming as the Relative Strength Index (RSI) (14) oscillates between 40.00 and 60.00. A breakout of the bullish zone between 60.00 and 80.00 will trigger bullish momentum.

 

Should the Cable firmly surpass the high of 1.2112 on December 27, Pound Sterling bulls would drive the asset to the high of 1.2189 on December 21, followed by the high of 1.2242 on December 19.

 

In contrast, a significant slide below the low of December 22 at 1.1992 will cause the Descending Triangle to collapse and drag the Cable to the low of November 29 at 1.1940. A breach below this level would expose the pound to more weakness near the low reached on November 30 around 1.1900.

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